When I first travelled through Mozambique, the picture was idyllic. Leaving sprawling Maputo behind, my main impression was of beaches, coconut trees and serene dhows. Every now and then you pass through a small village. You plan your mileage carefully, or run the risk of being left to buy plastic bottles of fuel next to the road. You buy fish, tomatoes, onions and fresh pão bread from the local market, and stop to buy cashew nuts from roadside vendors. But you make sure to be stocked up on essentials, because formal shops are few and far between. And, of course, you take enough cash, as there are unlikely to be any ATMs or card facilities.

As a tourist, this is all part of the adventure – and the further north you go, the bigger the adventure. Luckily, you think, the coal, iron ore, heavy sands and other megaprojects that are starting to dot the Mozambican landscape are few and far between. For the most part, Mozambique remains “rustic.”

But I came to reflect differently on this when we wrapped up the Making Access Possible (MAP) Mozambique diagnostic in 2015. Once you dig deeper, you see a land of stark economic, political economy and infrastructure divides, meaning that the bulk of Mozambicans are unable to improve their economic fate. The figures bear this out: Despite average economic growth of 7.5 percent between 2005 and 2014 and the country attracting the third most foreign direct investment in Africa, almost two out of every three Mozambicans live in absolute poverty (below $1.25/day) and Mozambique ranks a dismal 180th out of 188 on the Human Development Index.

In fact, the combination of infrastructure deficit caused by colonial neglect and civil war, a centralist political economy, the sheer scale of poverty, and limited formal sector employment opportunities creates sharp income inequalities and shapes what we refer to as a citadel economy, where high walls separate those inside and outside the enclave. The “insiders,” largely urban government employees and other salaried workers, are economically empowered and able to benefit from the infrastructure in urban areas. The “outsiders,” in contrast, operate in the informal and agrarian economy, with very poor infrastructure. On each side are distinctly separate legal, financial and economic worlds.

This keeps financial service providers from reaching excluded target markets. The uptake figures speak for themselves and are unlikely to change anytime soon. The insiders have the highest penetration of formal financial services (and the only notable usage of formal credit and insurance) by a long shot: FinScope (2014) figures as quoted in MAP show that 88 percent of government workers and 67 percent of other salaried workers are formally included. This contrasts sharply with farmers, for instance, where only 7 percent are banked and a further 3 percent use other non-bank formal services.

When we spoke to people on the ground as part of our qualitative research, it was clear they do not regard themselves as viable contenders for formal financial services. Instead, they turn to family and friends, borrow from a local agiota (moneylender) or belong to a xitique (rotating savings club). As one lady put it: “The only way to save money is through the xitique.” Most, however, remain totally excluded; a full 61 percent of farmers do not use any form of financial services.

Formal institutions reinforce this view. By and large, they do not regard the mass or low-income market as part of their primary target market, nor do they have the tools to serve them. By requiring complex documentation, unfamiliar terms and conditions, formal identification, and proof of income or address, they largely conduct business in a manner that does not reflect the world in which most Mozambicans live.

Even more fundamentally, they have thus far not been able to reach into the areas where most of these people live. In addition to a payments system characterised by manual clearing and settlement, the payments footprint and supporting infrastructure (e.g. electrical infrastructure to keep systems online) is severely constrained. This comes at great cost. To top it all, liquidity is constrained by the capital scarcity that permeates the economy. This is one of the reasons why large banks are focussed on high-value corporate and retail clients, and have little capacity or incentive to serve middle- or lower-income clients.

While some things have changed since I first visited Mozambique (they now have a highway that connects the more affluent South with the rural North), much remains the same. If anything, the citadel walls are growing higher. The question for financial inclusion is: How do you break down these walls or find a way around them? MAP suggests that one way may be to catapult certain services for certain defined groups of people over the walls. Another is to explore linkages between insiders and their outsider families and communities – by deepening access for those inside the citadel, those beyond may also benefit. A lot will ride on government pulling a few key levers at its disposal to shape industry incentives, such as creating sound regulatory frameworks for important product categories like mobile money and cross-border remittances, and reducing client barriers seated in regulation – notably through simplified Know Your Customer requirements on bank accounts.

The answer to connecting people outside the citadel to services within it will first and foremost lie in electronic payments. This will require a widespread and interoperable payment system footprint. But to do so, it’s important to recognise that cash remains the lifeblood of economic activity outside of the citadel – a situation that is unlikely to change anytime soon. Any attempt at migrating adults to electronic payments will therefore require services that can still facilitate the preference for cash. Building a functional network of cash points will be indispensable to expanding the payment footprint, and bridging the walls that separate the included from the excluded in Mozambique.